The tax is deducted by the employer. The employer deducts the TDS from the employee salary and submits to the banks for payment of TDS. Income tax department issued every TDS deduct or Tax Identification number (TIN). This is the duty of the TDS deduct or on behalf of the employee whose salary is deducted, to fill form 16 for each employees whose salary is deducted TDS. In this form all the details like every month salary, salary deducted and salary paid should be submitted. Company, the deductor, need to pay every employee details separately. Form 16 is also very much needed for the employees point of view as any employee need form 16 to submit his/her income tax return. If any employee works two or three places, and TDS deducted from each place, he/she need to submit all the form 16 from each employer to submit income tax return. There are some points for form 16. 1- No Form 16 is required to be issued if TDS is not deducted from the salary. 2- If TDS is deducted by banks to the pension holder, banks also need to issue Form 16. 3- These certificate need to give with in one month from the end of financial year it means 30-04-2010. 4- If the salary is more than 150000 rupees the employer also need to furnish Form 12BA for stating all the perks and allowances given to the employer. 5- Employer can sign digital on Form 16 as per circular 2/2007 dated 21-05-2007. 6- There is a penalty of rupees 100 daily for non submitting form 16 on time, without good reason, and the plenty can’t be more than total amount of TDS deducted. 7- If the original form 16 is lost, the deductor can submit the details on plain paper to the department.

What is Form 16? It is a certificate issued to you by your employer stating the details of the salary you have earned and the tax deducted on your behalf and paid to the government. If you are an employee of the company (which means you are on the company's payroll), you should receive your Form 16 by April 30 every year

The government encourages certain types of savings – mostly, long term savings for your retirement – and therefore, offers you tax breaks on such savings. Sec 80C of the Income Tax Act is the section that deals with these tax breaks. It states that qualifying investments, up to a maximum of Rs. 1 Lakh, are deductible from your income. This means that your income gets reduced by this investment amount (up to Rs. 1 Lakh), and you end up paying no tax on it at all! Qualifying Investments
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Provident Fund (PF): The payments that you make to your PF are counted towards Sec 80C investments. For most of you who are salaried, this amount gets automatically deducted from your salary every month. Thus, it’s not just compulsory savings for your future, but also immediate tax savings!

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Voluntary Provident Fund (VPF): If you increase your PF contribution over and above the statutory limit (as deducted compulsorily by your employer), even this amount qualifies for deduction under section 80C. Public Provident Fund (PPF): If you have a PPF account, and invest in it, that amount can be included in Sec 80C deduction. The minimum and maximum allowed investments in PPF are Rs. 500 and Rs. 70,000 per year respectively. Life Insurance Premiums: Any amount that you pay towards life insurance premium for yourself, your spouse or your children can also be included in Section 80C deduction. Please note that life insurance premium paid by you for your parents (father / mother / both) or your in-laws is not eligible for deduction under section 80C. If you are paying premium for more than one insurance policy, all the premiums can be included.

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It is not necessary to have the insurance policy from Life Insurance Corporation (LIC) – even insurance bought from private players can be considered here.
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Equity Linked Savings Scheme (ELSS): There are some mutual fund (MF) schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. The investments that you make in ELSS are eligible for deduction under Sec 80C.

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Home Loan Principal Repayment: The Equated Monthly Installment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest. The principal component of the EMI qualifies for deduction under Sec 80C.

Even the interest component can save you significant income tax – but that would be under Section 24 of the Income Tax Act

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Stamp Duty and Registration Charges for a home: The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house. National Savings Certificate (NSC): The amount that you invest in National Savings Certificate (NSC) can be included in Sec 80C deductions. Infrastructure Bonds: These are also popularly called Infra Bonds. These are issued by infrastructure companies, and not the government. The amount that you invest in these bonds can also be included in Sec 80C deductions. Pension Funds – Section 80CCC: This section – Sec 80CCC – stipulates that an investment in pension funds is eligible for deduction from your income. Section 80CCC investment limit is clubbed with the limit of Section 80C - it maeans that the total deduction available for 80CCC and 80C is Rs. 1 Lakh. This also means that your investment in pension funds upto Rs. 1 Lakh can be claimed as deduction u/s 80CCC. However, as mentioned earlier, the total deduction u/s 80C and 80CCC can not exceed Rs. 1 Lakh.

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Bank Fixed Deposits: This is a newly introduced investment class under Section 80C. Bank fixed deposits (also called term deposits) having a maturity of 5 years or more can be included in your Sec 80C investment.

Post Office Time Deposit Account: This is the fixed / term deposits offered by the Department of Posts (Government of India) through the post offices in India. If the time deposit is opened for a duration of 5 years or more, the amount invested is qualified for deduction under section 80C.

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Others: Apart form the major avenues listed above, there are some other things, like children’s education expense (for which you need receipts), that can be claimed as deductions under Sec 80C.

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Let’s say you are a male with an income of Rs. 2,50,000 for the year. Your employer has deducted Rs. 24,000 as PF. You have no housing loan, but have purchased NSC worth Rs. 10,000.

Thus, your total qualifying investments under Sec 80C are Rs. 34,000. Since this is less than Rs. 1 Lakh, this is the amount that would get deducted from your income. Thus, you would have to pay tax on Rs. 2,16,000. The tax on Rs. 2,16,000 would be Rs. 17,200. If there were no investments made under section 80C, the tax on an income of Rs. 2,50,000 would have been Rs. 24,000. Thus, by making these investments, you end up saving Rs. 6,800! Also, if you would have made the full investment of Rs. 1,00,000, the tax would have further reduced to Rs. 4,000 – a saving of Rs. 20,000!

So, where should you invest? Like most other things in personal finance, the answer varies from person to person. But the following can be the broad principles: Provident Fund: This is deducted compulsorily, and there is no running away from it! So, this has to be the first. Also, apart from saving tax now, it builds a long term, tax-free retirement corpus for you. Home Loan Principal: If you are paying the EMI for a home loan, this one is automatic too! So, it comes as a close second. Life Insurance Premiums: Every earning person having dependents should have adequate life insurance coverage.

Voluntary Provident Fund (VPF) / Public Provident Fund (PPF): If you think that the PF being deducted from your salary is not enough, you should invest some more in VPF, or in PPF. Equity Linked Savings Scheme (ELSS): After the above, if you have not reached the limit of Rs. 1,00,000, then you should invest the remaining amount in Equity Linked Savings Scheme (ELSS). Equities provide the best, inflation-beating return in the long term, and should be a part of everyone’s portfolio. After all, what can be better than something that gives great return and helps save tax at the same time? When to Invest? Many of us start looking for investment avenues only in February or March, just before the Financial Year is getting over. This is a big mistake! One, you would end up investing your money without putting proper thought to it. And secondly, you would end up losing the interest / appreciation for the whole year!

Instead, decide where you want to make the investments, and start investing right from the beginning of the financial year – from April. This way, you would not only make informed decisions, but would also earn the interest for the full year from April to March! Happy tax planning! TDS Rates for 2010-11

Male

Female

Senior Citizen

Tax (%)

For Income Between 0 to For Income Between 0 to For Income Between 0 to 1,60,000 1,90,000 2,40,000 0 For Income Between 1,60,001 to 5,00,000 For Income Between 5,00,001 to 8,00,000 For Income above 8,00,001 Surcharge Education Cess For Income Between 1,90,001 to 5,00,000 For Income Between 5,00,001 to 8,00,000 For Income above 8,00,001 For Income Between 2,40,001 to 5,00,000 For Income Between 5,00,001 to 8,00,000 For Income above 8,00,001 10 20 30

0 3

Income Tax Due Dates Payment of Advance Taxes of Income Tax - Individual/Firms:
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10 per cent 20 per cent 30 per cent Nil 10 per cent 20 per cent 30 per cent

Computation of Income This section contains only salient features for computation of income. The sections in this topic are as under:
Salary income House Property income Capital Gains Other Sources Income Deductions Rebates

INCOME TAX – FREQUENTLY ASKED QUESTIONS
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INCOME TAX – QUESTIONS AND ANSWERS :What is an Assessment Year? It is the twelve-month period 1st April to 31st March immediately following the previous year [refer answer-4]. In the Assessment year a person files his return for the income earned in the previous year. For example for FY:2006-07 the AY is 2007-08. What does the Income Tax Department consider as income? The word Income has a very broad and inclusive meaning. In case of a salaried person, all that is received from an employer in cash, kind or as a facility is considered as income. For a businessman, his net profits will constitute income. Income may also flow from investments in the form of Interest, Dividend, and Commission etc. Infect the Income Tax Act does not differentiate between legal and illegal income for purpose of taxation. Under the Act, all incomes earned by persons are classified into 5 different heads, such as: Income from Salary Income from House property Income from Business or Profession Income from capital gains

Income from other sources My children living abroad send me Rs.20000/- per month for my maintenance. Would this be considered as my income? No. What is a return of income? It is a prescribed form through which the particulars of income earned by a person in a financial year and taxes paid on such income is communicated to the Income tax department after the end of the Financial year. Different forms are prescribed for filing of returns for different Status and Nature of income. From where can I get a return form? The Public Relation Officer [PRO] can be contacted for this purpose. The form can also be downloaded from the site http://www.incometaxindia.gov.in/. How can I know which form is applicable for my income? You should choose a return form according to your status and nature of income from the following: ITR1 – For Individuals having Income from Salary/ Pension/ family pension & Interest ITR2 – For Individuals and HUFs not having Income from Business or Profession ITR3 – For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship ITR4 – For individuals & HUFs having income from a proprietary business or profession ITR5 – For firms, AOPs and BOIs ITR6 – For Companies other than companies claiming exemption under section 11 ITR7 – For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) ITR8 – Return for Fringe Benefits ITRV – Where the data of the Return of Income/Fringe Benefits in Form ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-8 transmitted electronically without digital signature If I fail to furnish my return within the due date of filing, will I be fined or penalized? Yes. This may take the form of interest if the return is not filed before the end of the assessment year. If the return is not filed even after the end of the assessment year, penalty may also be levied. If I have paid excess tax how and when will it be refunded? The excess tax can be claimed as refund by filing your income tax return. It will be refunded by issue of cheque or by crediting to your bank account. The department has been making efforts to settle refund claims within four months from the month of filing return. There are various deductions that have not been reflected in the Form 16 issued by my employer. Can I claim them in my return

Yes. What is considered as Salary income? Whatever is received by an employee from an employer in cash, kind or as a facility [perquisite] is considered as Salary. What are allowances? Are all allowances taxable? Allowances are fixed amounts, apart from salary, which are paid by an employer for the purpose of meeting some particular requirements of the employee. There are generally three types of allowances for the purpose of income tax- taxable, fully exempted and partially exempted. My employer reimburses all my expenses on grocery and children’s education. Would this be considered as income? Yes. These are in the nature of perquisite. Even if no taxes have been deducted from salary, is there any need for my employer to issue Form-16 to me? Form-16 is a certificate of TDS and in your case it will not apply. However your employer must issue a salary statement. If I am receiving my pension through a bank who will issue Form-16 or pension statement to me- the bank or my former employer? The bank. Are retirement benefits such as PF and Gratuity taxable? No. They are exempt subject to conditions and limits laid down in the Income Tax Act. Can my employer consider relief u/s 89(1) for the purposes of calculating my tax liability? Yes. Is leave encashment taxable as salary? It is taxable if received while in service. Received as retirement benefit, however it is exempt subject to certain conditions. What is TDS? TDS means Tax Deducted at Source. It is the amount withheld from payments of various kinds such as salary, contract payment, commission etc. This withheld amount can be adjusted against your tax due. Some demand has been raised by my Assessing officer after assessment. Can I pay this demand in installments or seek time till my appeal is settled? Yes. You may approach your Assessing officer within 30 days of receipt of demand notice for installments or stay or seek time for payment. However you are liable to pay interest for delay in payment of demanded tax.

* Form 16 is a certificate issued by the employer at the end of the year and provided to the employee. This certificate provides details of the salary income of the employee and the TDS deducted from the employee's income. * Form 16 is all you need to file ITR if you have reported all your income to your employer. * It is your right to obtain F16 from the employer within 15 days time after the end of the financial year. * Obtain your Form 16 early, so that you can file your return early. The earlier you file, the faster you will get refund. * Your chance of scrutiny reduces by filing early. * Ensure that you have F16s from all the employers that you have worked for during the year.